Effects of Crime Rate on Residential Property Values: A Case Study of Ibadan North Local Government Area, Oyo State

Abstract

The relationship between crime rate and property values has become a subject of growing concern in urban studies and real estate research. In many developing cities, insecurity increasingly dictates residential mobility, investment choices, and the overall sustainability of housing markets. This study investigates the effects of crime on residential property values in Ibadan North Local Government Area (LGA), Oyo State, Nigeria. Using a mixed-method approach, the research examines how different types of crime—including burglary, theft, and armed robbery—shape the residential property market and influence both capital and rental values. Crime constitutes a significant neighborhood externality. As Gibbons (2004) noted, “crime operates as a disamenity factor, reducing the attractiveness of communities and lowering housing demand” (p. 588). In the Nigerian context, studies have highlighted how rising insecurity in urban areas has altered housing preferences and property transactions (Ajayi, 2018; Oduwaye, 2019). Drawing from these insights, this study employed a structured survey of 200 respondents, complemented with police crime records and estate market data. By integrating hedonic pricing theory, which emphasizes that property values reflect the sum of locational and neighborhood characteristics (Rosen, 1974), and the Crime Prevention through Environmental Design (CPTED) framework (Cozens et al., 2005), the research situates crime as a measurable determinant of property market performance. The findings reveal a statistically significant negative correlation between crime rates and residential property values (R = -0.62, p < 0.05). High-density neighborhoods such as Agbowo and Yemetu, with recurrent incidents of burglary and theft, recorded rental values 20–30% lower than relatively secure areas like Bodija. This echoes Linden and Rockoff’s (2008) conclusion that “housing markets respond swiftly to changes in perceived safety, with buyers capitalizing crime risk into property prices” (p. 1165). Furthermore, respondents expressed willingness to pay a “safety premium” in exchange for living in secure environments, underscoring the importance of security as a core housing attribute. In conclusion, the study affirms that crime erodes residential property values in Ibadan North, discourages real estate investment, and diminishes the liveability of affected neighborhoods. It recommends strengthening community policing, integrating CPTED strategies into urban design, and promoting public–private partnerships for neighborhood security. Beyond its academic contribution, the study provides practical insights for estate managers, urban planners, and policymakers, who must address crime not merely as a social challenge but also as a factor shaping housing market dynamics and urban economic growth.